"Blacklist" Helps Merchants Spot Assertive Consumers

"The Customer Is Not Always Right"

A mysterious company has been compiling a list of shoppers who have
disputed, or "charged back," credit card charges for fraudulent or defective merchandise, selling the list to merchants so they can identify "bad customers."

ChargeBack Bureau bills itself as a service for merchants, because in
its words, "the customer is not always right."

ChargeBack Bureau
member merchants can enter information on customers who have reversed
credit card charges into a database, which is then
shared with other members. Membership costs $99.99 a year, and the
information is used to "know your customers before you sell them
something."

Not only does the customer information -- including names, addresses,
e-mails, and shopping transactions -- get collected without shoppers'
consent, but the ChargeBack Bureau then sends an e-mail to customers
listed in the database, warning them that their information has been
entered into a "negative database."

The warning implies that like
adverse credit reports or rental screening databases, they will have
trouble buying goods in the future, unless they negotiate with the
merchant who entered the negative information.

According to the Chargeback Bureau's privacy policy, "[i]nformation
about customers who initiated a chargeback in the past are only
displayed when a positively identifiable match is found. Reports older
than 60 days are shared with several credit bureaus worldwide."

The company claims to be part of the Goldwell Corporation, based in
Panama, and conveniently out of the reach of American laws regarding
privacy and credit card protection.

According to San Francisco
Chronicle reporter David Lazarus, efforts to reach company
representatives by e-mail and telephone were in vain. (story)

A Business Wire press release from Jan 1st, 2003, claimed that the
ChargeBack Bureau staff could even "give merchants the location of the
IP address from which an order is made so that it can be compared with
the billing address."

The company claimed to have 40,000 records in
its database at the time, and was serving 7,500 merchants.

Merchants who join the ChargeBack Bureau can put a banner on their
site trumpeting their affiliation.

Career assistance site FabJob.com's
chargeback policy states that "[a]nyone who orders a product then
attempts to do a chargeback ceases to be a customer of FabJob.com. We
report such individuals to the Chargeback Bureau to warn the 7,500
other merchants that belong to the bureau, and help them avoid being
defrauded."

Under the Fair Credit Billing Act, any shopper has the right to
petition their bank to reverse charges on a credit card if the charge
is fraudulent, if the merchandise was defective, or if it was not what
the shopper originally ordered. The bank then charges the merchant for
the cost of the transaction.

Although chargebacks can cost retailers and merchants money, that
doesn't outweigh the right of shoppers to get money back from charges
they never made, or for products that don't work.

According to a
report released in April 2006 by the Merchant Risk Council (MRC), a
team of online fraud investigators whose sponsors include American
Express and Expedia.com, rates of chargebacks from online fraud have
been dropping to less than 0.1 percent of sales.

At ConsumerAffairs we love to hear from both consumers and brands; please never hesitate to Contact Us.

At ConsumerAffairs we take privacy seriously, please refer to our Privacy Policy to learn more about how we keep you protected.

You’re responsible for yourself and please remember that your use of this site constitutes acceptance of our Terms of Use.

Advertisements on this site are placed and controlled by outside advertising networks. ConsumerAffairs.com does not evaluate or endorse the products and services advertised. See the FAQ for more information.

The information on our website is general in nature and is not intended as a substitute for competent legal advice. ConsumerAffairs.com makes no representation as to the accuracy of the information herein provided and assumes no liability for any damages or loss arising from the use thereof.